Bankman-Fried $250M Bond Is a ‘Joke,’ Claims Securities Lawyer
Sam Bankman-Fried’s bail terms are “ludicrous,” said James Murphy, securities lawyer and founder of Ludlow Street Advisors, a platform geared towards the metaverse, crypto and Web3.
Murphy, former chairman and co-founder of law firm Murphy & McGonigle PC, said there was no real money used for Bankman-Fried’s bond, only the promise of it should he flee the country.
“The original bond is a joke,” Murphy said on CoinDesk TV’s “First Mover” on Thursday.
In December, Bankman-Fried was arrested on a number of charges “in a global scheme to deceive and defraud customers and lenders of FTX and Alameda, the defendant's crypto hedge fund, as well as a conspiracy to defraud the United States government,” according to the Justice Department. After he was extradited to the U.S. from the Bahamas, where he was arrested, Bankman-Fried was released on a $250 million bond, co-signed by his parents, who put up their home in Palo Alto as collateral.
According to Murphy, the agreement made by his parents to pay $250 million should Bankman-Fried decide to flee the U.S. is not what it seems because the parents “don’t have the assets nearly in that amount, as far as we know.”
On Wednesday, Judge Lewis Caplan of the Southern District of New York (SDNY) disclosed the names of the two additional bond co-signers, Stanford University’s Andreas Paepcke, a senior research scientist; and Larry Kramer, once a dean of the university’s law school. They had agreed to pay $200,000 and $500,000, respectively. However, said Murphy, only if Bankman-Fried decided to skip town would “they have to write a check.”
The terms of their bonds had the same stipulations, according to Murphy, who previously called into question whether the terms of Bankman-Fried’s bond were in fact substantial.
“Normally you’ve got to put up property assets to back the bond or go to a bail bondsman and give them 10% to 15% of the face amount of the bond,” he said. In Bankman-Fried’s case, “none of that happened,” Murphy said, adding that “Sam put down nothing” and “his parents put down no cash.”
However, Anthony Michael Sabino, co-founder of law firm Sabino & Sabino P.C., told CoinDesk in an interview there is no bail bond entity in the U.S. that is “is going to put up any bond, let alone [for] someone of this colossal nature, unless they have in hand either cash or a mortgage on a piece of real estate or somebody’s jewelry.”
Sabino, also a professor of law at St. John’s University, added that if it were the case that no money was placed upfront, bond issuers would be taking on further risks. He added that when bonds are posted, “people usually don’t discuss it. It’s a private matter.”
As to whether the Bankman-Fried’s bond was issued in a fair manner, Sabino said that “a bond in the amount of $250 million is a very serious matter,” and “I wouldn’t call it a joke.”
He said the reason the bond is as high as it is because there is “the very real danger of Mr. Bankman-Fried fleeing the jurisdiction,” adding that in light of Bankman-Fried’s recent actions he’s proven to be troublesome. The potential for him to jet off somewhere outside of the U.S. can’t be completely ruled out.
“[Sam Bankman-Fried] is precisely the kind of guy because of his political connections, his resources [and] the fact that he again spent a lot of time already in another jurisdiction. He is very definitely a flight risk.”
Murphy told CoinDesk TV, “Prosecutors wanted to look tough and wanted to be able to say, 'This is the largest bond anybody’s ever seen. This is quite onerous,'” in reference to why prosecutors acted fast and negotiated with Bankman-Friend’s lawyers in an effort to prevent the 30-year-old from fleeing the Bahamas.
Bankman-Fried’s bond rules, however, may soon be changing following a request from federal prosecutors that would stop Bankman-Fried from using his cell phone and accessing the internet except under certain circumstances. That, Murphy said, came as a shock, adding, “that was not an original condition of his bail.”
“I cannot explain it, based on my 30 years of doing this. I've never seen anything this lenient in a situation where someone has millions of victims,” Murphy said. “I don't know why they [federal prosecutors] continue to be lenient, as he's kind of pushing the envelope in terms of what he can do.”
Attorney Sabino, however, said that “because it’s not a crime of violence, we tend to be more lenient in our justice system.”
“The mini travails of Sam Bankman-Fried have been unique,” Sabino said, adding that “SBF is darn lucky,” to have gotten bail.